The Brown Brothers Harriman Team comments on the intra-EU political scenario arising from Tsipras victory, and view that the possibility of Grexit is next to none.
Key Quotes
“In the medium-term, the changes in intra-EU political risk stemming from the Greek elections are multifaceted and continue to develop. The fact that a government was formed quickly eliminated the risk of a prolonged period of political uncertainty in Greece. This helped markets get some relief, albeit short lived.”
“However, the choice of coalition, the right-wing Independent Greeks party, creates other areas of friction. While some periphery countries are worried about their emboldened left political flank (Portugal’s Left Bloc and especially Spain’s Podemos, whose leader went to meet Tsipras after his victory), Germany and France are more concerned about their right flank. Even though Syriza’s nationalistic coalition partner is a far cry from the ultra-right Golden Dawn, it’s likely to leave Germany and France in a harder political position to negotiate. France’s Marine Le Pen, for example, characterized the new government as “the start of the trial of the euro-austerity”.”
“All in all, we stick to our view that there will be no Grexit, but there will be turbulent times ahead.”
Key Quotes
“In the medium-term, the changes in intra-EU political risk stemming from the Greek elections are multifaceted and continue to develop. The fact that a government was formed quickly eliminated the risk of a prolonged period of political uncertainty in Greece. This helped markets get some relief, albeit short lived.”
“However, the choice of coalition, the right-wing Independent Greeks party, creates other areas of friction. While some periphery countries are worried about their emboldened left political flank (Portugal’s Left Bloc and especially Spain’s Podemos, whose leader went to meet Tsipras after his victory), Germany and France are more concerned about their right flank. Even though Syriza’s nationalistic coalition partner is a far cry from the ultra-right Golden Dawn, it’s likely to leave Germany and France in a harder political position to negotiate. France’s Marine Le Pen, for example, characterized the new government as “the start of the trial of the euro-austerity”.”
“All in all, we stick to our view that there will be no Grexit, but there will be turbulent times ahead.”
